SELECTIVE EMPLOYMENT PAYMENTS VARIATION ORDER 1969 (Hansard, 24 June 1969)

§ LORD BROWN

My Lords, I beg to move that the Selective Employment Payments Variation Order, a draft of which was laid before this House on May 21 be approved. The purpose of Article 2 of this Order is to add four employments to the employments to which Section 1 of the Selective Employment Payments Act 1966 applies. This means that establishments engaged by way of business in such employments will be eligible for refund of selective employment tax and, in addition, in development areas to selective employment premium and regional employment premium. The employments are scrap-metal processing, waste-paper processing, film production and industrial photo-printing.

85 Since the early days of selective employment tax there has been a good deal of pressure from the waste-reclamation industries for scrap-metal processing and waste-paper processing to be relieved of the tax in the way which is now proposed. These industries contribute a great deal to the country's economy by providing the raw materials which enable further manufacturing processes to be carried out. Their products are carefully graded to a large number of individual specifications which can be used in manufacturing industry without further modification. It is intended that only establishments which process scrap-metal and waste paper by the use of machinery and to the specifications required by manufacturing industry should be eligible to benefit under this Order. It is not intended—and I must make this clear—that those scrap-metal and wastepaper merchants who merely collect scrap metal and waste-paper and sell it again without fulfilling the precise conditions laid down in the Order should benefit. The Order therefore draws a clear line between scrap-metal and waste-paper merchants and those processors who are producing to specifications laid down and are using machinery in order to do so.

The third industry to benefit under the Order is the production of films either for public exhibition or for television presentation. Again, ever since the imposition of the tax the Government have been pressed by the film production industry to make a concession of this nature. The industry is producing a manufactured article; namely, a film which can be and is sold. So far, the manufacture of unexposed cinematograph film has been eligible for refund of S.E.T. and so has the processing of exposed film for public exhibition. The intervening process—namely, the "shooting" and production of films—becomes entitled to refund under this Order. I should perhaps point out that similar processes recorded not on film but on videotape are not covered by this Order but are covered in the 1968 edition of the Standard Industrial Classification which comes into effect for S.E.T. purposes on the same date as this Order, subject to the approval of Parliament. This means that there will be no difference in treatment between films for public exhibition and videotape for television presentation.

86 The fourth employment now eligible for refund is industrial photoprinting. This is a comparatively small industry which produces enlargements of photographic prints for exhibition, publicity or display. It is to some extent in competition with the printing industry which has always been eligible for refund of the tax, and thus a minor anomaly is rectified.

Apart from these matters, there are two other matters covered by Article 2 of the Order to which I would draw your Lordships' attention. Last year's Selective Employment Payments Variation Order gave refund of S.E.T. and premium in development areas to slaughterhouses in the private sector of industry. Local authorities' slaughterhouses already received refund of tax under a different section of the Act. However, since last year's Order was laid before your Lordships it has become apparent that a number of private slaughterers have establishments within local authority slaughter-houses. These establishments were covered neither by the Act nor by last year's Order and thus a further anomaly was created. The present Order sets that right.

A further amendment to last year's Order is required in order that the slaughtering of animals when performed from a knackers yard, as for example on a farmer's premises, shall become eligible for refund of S.E.T. Under last year's Order, slaughtering animals within a knackers yard became eligible for refund. However, a number of knackers yards carry out the majority of their slaughtering on farmers' premises. The present Order puts all knackers yards on an equal footing, irrespective of where the actual slaughtering is carried out.

Finally, by Article 3 the Order acids one employment to Section 2 of the Act, which means that establishments engaged in it are eligible for refund only. They can never get premium even in development areas. This activity is that covered by Minimum List Heading 601 of the 1968 edition of the Standard Industrial Classification which relates to the production and distribution of gas. The public utilities—that is, gas, electricity and water—are of course mainly nationalised or are local authority enterprises. They are thus covered by Sections 3 and 4 of the Selective Employment Payments 87 Act and receive refund of the tax under those sections. However, when the tax was introduced, it was realised that there were a small number of private establishments which generated electricity or purified and distributed water. Such establishments were therefore made eligible for refund under Section 2 of the Selective Employment Payments Act by the Act itself. At that time there were no private sector establishments which produced gas. The position is now different. There are a small number of private sector establishments which process and purify North Sea gas before selling it to the Gas Boards. Under this Order these establishments become eligible for refund of S.E.T. in broadly the same way as establishments of gas boards engaged in the same processes.

The total cost of these concessions will be about £3 million in relief of S.E.T. and in premiums in a full financial year. It is proposed that the changes should take place on July 7, which is the same date as that proposed for the majority of the other changes in selective employment tax which are being made in this year's Finance Bill. My Lords, I hope that, with that explanation, it will be possible for your Lordships to approve this Order. I beg to move.